PRECIOUS-Gold inches up as dollar drifts following Fed

Published 12:54 AM ET Thu, 25 Oct 2012
Reuters

SINGAPORE, Oct 25 (Reuters) - Gold edged up in thin trade on Thursday as the U.S. dollar trimmed gains, although the metal was still within sight of its weakest in seven weeks, hit after the U.S. Federal Reserve stuck to its stimulus programme.

FUNDAMENTALS

* Gold had added $4.86 an ounce to $1,706.79 by 0025 GMT. It marked a low around $1,698 on Wednesday, its weakest since September 7, soon after the Fed said in a policy statement containing few surprises that it was sticking to its plan to keep stimulating growth until the job market improves.

* But as the dollar trimmed gains on the Fed announcement, bullion eased higher. A weaker greenback makes assets denominated in the dollar more appealing to holders of other currencies.

* U.S. gold for December delivery rose $6.30 an ounce to $1,707.90.

* In a statement after a two-day meeting, the Fed repeated its vow to keep rates near zero until mid-2015 and its pledge to keep supporting growth while the recovery strengthens.

* Euro zone businesses suffered another dismal month in October, suggesting the economy may be headed for a deeper recession than expected, but conditions improved slightly for U.S. and Chinese manufacturers.

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MARKET NEWS

* The dollar index retreated from a peak of 80.151 to 79.940, but remained well above last week's trough of 78.935. As a result, the euro climbed off a near two-week low of $1.2921 to $1.2970.

* Japan's Nikkei share average dipped at Thursday's open as investors weighed up profit forecast cuts from Nintendo Co Ltd and others as the country's earnings season gets under way, although expectations of further monetary easing by the Bank of Japan provided support.